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What is Currency Margin?

If you use margin trading (such as buying US stocks with Hong Kong dollars), Longbridge may charge a certain percentage of currency margin due to the risk of exchange rate fluctuations.

Example:

A client deposits 20,000 HKD and buys 2,000 USD worth of US stocks, and later the value of the US stocks drops to 1,900 USD. Although the overall net asset value of the account is approximately 19,220 HKD (calculated at an exchange rate of 7.8), the US dollar assets are not enough to cover the debt, and a currency margin of 4 USD will be charged.

The calculation of the currency margin will be included in the buying power, withdrawal, and margin call.

HKD BalanceHKD 20,000
USD BalanceUSD -2,000
Position Market ValueUSD 1,900
NAV(HKD)HKD 20,000
NAV(USD)USD -100
Currency MarginUSD 100 * 0.04 = USD 4

The following are the currency margin ratios for each currency:

CurrencyCurrency Margin
USD4%
HKD4%